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Business Practices

Business Practices

The Independent Auction Administrator will serve as the first point of contact for Energy Auction questions and needs. Click the following link for Contact Information.

Registration Process

Auction Participants can download the necessary registration documents from the Auction Registration Process section of the Energy Auction website. The Phase II Participant Agreement must be executed by all Participants, and the OATI Non Disclosure Agreement (Annex B of Participant Agreement) must be executed by those who did not execute during Phase I.

Accessing the Southern Company Energy Auction software

Southern Company has contracted with OATI to develop and host the webMarket software being used for the Southern Company Energy Auction. After completing the registration process, auction participants will be assigned webMarket user logins by the Independent Auction Administrator. The webMarket software can be accessed directly at https://www.socowmkt.oati.com/socowmkt/sys-login.wml.

User login IDs and security certificates

The cost and number of webMarket administrator and user login IDs allowed for each auction participant is determined by the Participation Agreement. Each login ID requires the use of an OATI digital certificate. Auction participants are responsible for obtaining and managing these OATI digital certificates to the auction software. The auction participants may use their existing certificates or may obtain them directly from OATI. Southern Company currently is providing auction participants free of charge one (1) administrator login ID and up to three (3) user login IDs.

Programmatic Access

Within the Auction System, "Web Services" are available to facilitate automated uploading and downloading of various data. These Web Services are approved by the Auction Provider for programmatic access to the Auction System, and user manuals related to Web Services will be available in the auction system. Any additional questions regarding programmatic access should be addressed to the IAA.

Submission of Auction Bids

To make a request to purchase energy offered through the day-ahead energy (DAE) Auction or hour-ahead energy (HAE) Auction, auction participants must submit a bid in the appropriate auction. A bid contains any number of requested bid blocks. Bid blocks consist of a desired megawatt amount - in 50-MW increments for the DAE Auction; and in single, 1-MW increments for the HAE Auction - at a specified bid price. Bids also must indicate whether the bid block can be partially cleared or must be cleared "full" (i.e., all or nothing). Once an auction participant has entered a bid, that bid may be changed at any point during the auction period (e.g., changing previously submitted bid blocks, adding or removing bid blocks, or removing the entire bid). However, in accordance with the limitations in the energy auction software, each auction participant company is limited to one bid per DAE auction and one bid per HAE auction.

Submission of Auction Offers

To make a request to sell energy through the day-ahead energy (DAE) Auction or hour-ahead energy (HAE) Auction, auction participants must submit an offer in the appropriate auction. An offer contains any number of offer blocks. Offer blocks consist of a desired megawatt amount - in 50-MW increments for the DAE Auction; and in single, 1-MW increments for the HAE Auction - at a specified offer price. Offers also must indicate whether the offer block can be partially cleared or must be cleared "full" (i.e., all or nothing). Once an auction participant has entered an offer, that offer may be changed at any point during the auction period (e.g., changing previously submitted offer blocks, adding or removing offer blocks, or removing the entire offer). However, in accordance with the limitations in the energy auction software, each auction participant company is limited to one offer per DAE auction and one offer per HAE auction.

Reasons for bid blocks being rejected

Bid blocks will be rejected where the bid price is lower than seller offer prices. Bid blocks also may be rejected for any of the following reasons: Submission of the bid block results in a potential credit violation; Clearing of the bid block results in a potential credit violation; and a bid block submitted as full clearing cannot be resolved as part of an auction clearing.

Reasons for offer blocks being rejected

Offer blocks will be rejected where the offer price is higher than all bid prices. Offer blocks also may be rejected for any of the following reasons: the bid blocks available violate credit if matched with the offer block; and an offer block submitted as full clearing cannot be resolved as part of an auction clearing.

Establishing & maintaining credit limits and company blocking

The credit limit that each auction participant company has with Southern Company will be modeled within webMarket. This limit within the software will be synchronized to the company's official credit limit, as maintained by Southern Company, on a regular basis (numerous times daily). Credit limits within webMarket also will be updated after the close of each DAE Auction and HAE Auction.

Participants wishing to participate as sellers must set up Counterparty Authorizations. In the webMarket system, this is referred to as "Match Blocking", and it disables Trading with counterparties for which Seller Participants specify. Likewise, Seller Participants must set up credit limits for all companies - these credit limits must be kept reasonably up to date because the webMarket system decrements credit for matched transactions - the default credit limit is zero.

Participants with matching bid blocks and offer blocks will be notified by webMarket after clearing.

Scheduling

As per the Auction Rules, unless otherwise agreed to between the buyer and seller, the buyer is responsible for obtaining necessary transmission for taking delivery of the transaction. The buyer is also responsible for submitting NERC tags for all HAE auction transactions and for DAE auction firm-LD transactions.

As per the Auction Rules, the buyer is responsible for ensuring that the scheduling source that appears on the NERC tag is the same as that assigned by the auction software. If the auction software does not assign the scheduling source, then the scheduling source will be provided by the seller so as to allow timely submission of the NERC tag. Seller retains the right to reject without consequence to itself any tag that does not contain the proper scheduling source.

As per the Auction Rules, the buyer is responsible for ensuring that the NERC tag contains the EnergyID number as assigned by the auction software. This EnergyID shall be located in the contract field of the physical path generator line. Seller retains the right to reject without consequence to itself any tag that does not contain the proper EnergyID.

Scheduling Sources

Seller Participants have the option to set up resource plans so that scheduling sources are automatically provided when a transaction match is created. This is not required, but a failure to provide this results in a "TBD" scheduling source (i.e., the seller must manually notify buyer of scheduling source).

Failure to properly take delivery of energy

For recallable energy and hourly transactions in which Southern Company is the seller and the buyer does not properly take delivery of the purchased energy, Southern Company will buy back the energy at 90 percent of the transaction price. If the buyer has netting in place with Southern Company, the buy back will correspond to a net payment to Southern Company in the amount of 10 percent of the total dollar value of the transaction as shown in the Transaction Summary.

For recallable energy and hourly transactions in which the seller is not Southern Company and the buyer does not properly take delivery of the purchased energy, buyer and seller will mutually agree to appropriate compensation.

Failure to take delivery includes, but is not limited to, the following reasons:

Failure to obtain proper transmission service for the transaction.

Failure to properly submit a NERC tag for the transaction by the scheduling deadline, including:

An improperly formatted tag that is rejected for any reason by any Balancing Authority or Transmission Provider on the contract path.

A NERC tag that is rejected by Southern Company because it contained a scheduling source other than that assigned via the auction software.

A NERC tag that is rejected by Southern Company because it did not contain the assigned EnergyID (see Business Practice #9 below); and

Failure to get a NERC Tag implemented because of a pre-existing TLR (the TLR was already in place when the auction opened).

Note that a buyer may continue to attempt to submit properly formatted tags up to the tagging deadline.

With respect to hourly non-firm transactions (i.e., the product sold in the HAE auction), both buyer and seller will have been deemed to have met their obligations with respect to delivery and receipt once the tag is implemented. The same is true for recallable energy transactions (i.e., one of the two products sold in the DAE auction) that have not been recalled. Transactions that are not fully delivered as a result of a TLR initiated after the tag has been implemented will be prorated based upon the actual MW delivered (i.e., neither party will be held responsible for the undelivered MW). Recallable energy transactions that are not fully delivered because they were recalled will be prorated based upon the actual MW delivered (i.e., neither party will be held responsible for the undelivered MW). For the firm-LD transactions (the other product sold in the DAE auction), standard rules and practices for the delivery and receipt of firm-LD products apply.

Treatment of recallable energy

Seller has the right, but not the obligation, to curtail recallable energy transactions for a qualifying supply disruption. A qualifying supply disruption may include the de-ration or unplanned outage of a seller-owned or controlled generating unit, the curtailment of a prescheduled purchase or the curtailment of a power purchase agreement.

For an independent power producer, recallable energy is equivalent to a unit contingent transaction. As such, the seller would have the right to recall due to the loss or de-ration of that generating unit.

For a marketer who does not own the supplying generation asset, the upstream should be a unit contingent or firmer product. In that event, the loss of the upstream supply will give the seller the right to recall. If the upstream product is nonfarm, loss of supply would be considered a failure to deliver.

The following paragraphs describe how Southern Company will treat recallable energy:

For Southern Company, a supply disruption includes the de-ration or unplanned outage of a Southern Company-owned or controlled generating unit that was included in the DAE available capacity calculation, as well as the curtailment of a DAE prescheduled purchase or power purchase agreement that was included in the DAE available capacity calculation. In the event of a supply disruption that affects the available capacity offered into the DAE auction, the fleet coordinator (Real Time Operations) shall determine if recallable energy transactions must be curtailed for reliability. If such transactions must be curtailed for reliability, the fleet coordinator shall instruct the energy coordinator (Hourly Trading) how many MWs to curtail and when to curtail them (e.g., 400 MWs beginning HE 12). Transactions equaling this amount of energy shall be curtailed for the remainder of the schedule in accordance with the curtailment priority established by the webMarket software.

If the recallable energy transactions do not need to be curtailed for reliability, the energy coordinator shall determine if the transactions should be curtailed for non-reliability reasons. The energy coordinator shall determine how many of the eligible MWs should be curtailed and what time the curtailment should begin. Transactions equaling this amount of energy shall be curtailed for the remainder of the schedule in accordance with the curtailment priority established by the webMarket software.

The energy coordinator or hourly scheduler will notify all counterparties with tags that must be curtailed. The counterparties have the right to buy through the full curtailment at the HAE auction price for recallable energy transactions curtailed for non-reliability purposes. If a counterparty does not choose to buy through the curtailment, the tag shall be curtailed. If a counterparty chooses to buy through the curtailment, the tag shall not be curtailed and the price for each hour thereafter shall be changed to reflect the hourly market clearing price. A counterparty that has chosen to buy-through a non-reliability curtailment shall have the right to terminate its buy-through by notifying the seller with one-hour's notice. The counterparty must terminate its buy-through for the remainder of the schedule. If the counterparty terminates the buy-through, the tag shall be curtailed.

If Southern Company authored the tags that must be curtailed, the energy coordinator or hourly scheduler shall initiate the necessary tag market adjustments within the business practice constraints of the Balancing authorities and transmission providers who are in the physical path of the tags. If Southern Company is not the tag author, the energy coordinator or hourly scheduler will contact the tag author and request that entity to initiate a tag market adjustment.

Financial bookouts

Recallable energy transaction shall not be booked out with a firm-LD transaction unless otherwise agreed to by the buyer and seller

Failure to consummate a transaction:

If for any reason, the buyer and seller fail to consummate a transaction that was cleared through the Auction, the buyer and seller must notify the IAA within 1 business day.

Invoicing of Auction Fees

User fees and transaction fees per Annex C of the Participant Agreement will be invoiced by and payable to the IAA on a monthly basis so long as the balance owed is at least $100.00 or such amount has been owed for longer than 6 months. When total fees exceed the threshold or time limit, the IAA will provide Participant with an invoice that states the amount owed by Participant, which will be due and payable in accordance with invoice instructions on or before the tenth (10th) day after receipt of the invoice or if such day is not a business day then on the next business day.

User Mistakes/Errors/Etc

Any actions taken through the use of Participant Passwords (except through the fault or negligence of the Auction Provider) whether or not such actions were authorized are binding on Participant.